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Dropshipping Pricing it doesn't make sense

by MoneyMang
17 replies
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So I have found some US dropshippers. But their pricing and shipping is ridiculous.

So the margins are obviously slim, but shipping for one product can go up to about $20.

The logic of a dropship supplier: If you sell more we can reduce pricing. I can't sell more or any products at all because the prices are too high. Or the other logic is they don't change pricing at all.

My competitors are selling the same products either at my wholesale price for a flat rate shipping of $5.

My mind is blown. How can anyone compete.

All my items are found on amazon and ebay for my wholesale price or lower and they offer free shipping.

My first problem is that I can't get products at a low price. Second is shipping. Who would pay $20 shipping if they can get it on amazon for free.

Do these suppliers really think I can make sales with the pricing and shipping they charge me. Just lol

But competition isn't all about price right? Discounts, retail perks, free shipping. Too bad my margins are too small to offer any of these.

How can someone even get started in this business?

Google shopping Ads? Makes it even more obvious that I am the highest priced retailer.
#dropshipping #make #pricing #sense
  • Profile picture of the author dave_hermansen
    First off, it is absolutely clear that you are not getting true wholesale pricing. I suspect that you did not contact the manufacturers directly and, instead, used some sort of dropship directory which skims a ton of the profit.

    Second, if you are selling products that only cost $20 max to ship, I have to believe that you are not selling very expensive products. We assume a 20% profit margin after shipping when we look at any niche. Some are a little lower and some are considerably higher but it is a good estimate to use when considering a product niche. With that in mind, if you are not selling things that cost AT LEAST $200, there is very little margin left for advertising expenses.

    Without having any idea of what you are selling, it seems to me that you are well under the typical margin of profit, the ideal average sale amount or both.
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    • Profile picture of the author MoneyMang
      Hey Dave,

      Thanks for taking your time to reply. Supplier isn't budging on price. I am selling pet supplies. I know I know, probably saturated. My I just wanted to get started. Some of these products are big, but I just don't understand how my competitors can offer a flat rate shipping of about $5. While several of my products ship for over $20. How do I get real wholesale prices then? I have a resale certificate and an LLC.

      Please explain to me how wholesale directories skim profit? All they do is have a list of suppliers. Do suppliers go "Hey this guy contacted me through a directory, time to screw him over on pricing"?

      I just know for a fact nobody in the right mind would pay that much shipping for these products. Even if I did get traffic right now, I know they would all abandon cart when they see shipping charges.

      Plus, I also checked Tech Data. There margins are even worse. Every wholesale price is exactly what they are selling on amazon and eBay if not more.

      Shipping is mainly my problem that is destroying my margins.
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  • Profile picture of the author dave_hermansen
    You get real wholesale pricing by contacting the brands directly - not going with the "wholesale pricing" some middle man sets you up with.

    There are not a whole lot of good niches in the pet supply business that aren't either totally saturated or that have high enough priced products that aren't available in local stores.

    RULE #1 : If people can buy it in a decent variety locally, don't even bother trying to sell it online. The WalMarts and PetSmarts of the world, who buy in bulk, will crush you on prices and people prefer to just pick things up when they are available locally.

    There are a few specialty items that cost a fair amount of money in the pet niche that you cannot buy locally. We have four different websites built around those products. For obvious reasons, I am not going to reveal those niches.
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    • Profile picture of the author MoneyMang
      How can a middle man even up the prices here? I just went throught a wholesale directory.

      So me contacting --> wholesale directory --> Distributor

      So me contacting --> Brand --> Distributor

      For the most part the distributor doesn't even know how you contacted them unless you specifically mention it. I ask brand for distributor list. They say ok and list them. I contact the distributor. If I don't say anything, they have no idea I contacted the brand. They can speculate.

      It's all the same isn't it. I eventually get pointed towards the distributor. Wholesale directory is just a directory. Besides the directory getting commission for generating leads to the distributor our pricing should be the same.

      Not to be rude, but I think we all know that whether the products are available locally or not people still buy these common items through ecommerce. I mean look at amazon pantry. Maybe its just me, but I buy everything online whether common or not. I can normally get better pricing online anyways.
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  • Profile picture of the author dave_hermansen
    Like I said, you need to start with the brand. You are making an awfully big assumption that the business you are being directed to is an actual distributor. In many of these cases, that "distributor" is just a middleman who stocks nothing and has their own dropship agreements in place either with the brands or with real distributors. You call in or Email your order to them and they contact the true dropshipper who ships it. In some cases, they are shell companies for the "wholesale directories". In other cases, they may be a very small distributor or even a retailer that doesn't get the same kind of deals the large distributors get.

    Far too often, these places are just middle-middlemen who are taking your order and dropshipping it from another distributor. Find out who the real distributors are from the actual brands. It is more than obvious that you are not getting good prices by going through a wholesale directory, which is almost always the case. Otherwise, places would not be selling retail for below your "wholesale" prices.
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    • Profile picture of the author MoneyMang
      Ok, well thanks again.

      I used Worldwide Brands. They have videos covering exactly what you said. Why in the world would they put these middleman in the directory when they teach to avoid them at all costs. But yeah, just got in contact with another distributor and well same crap.
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      • Profile picture of the author dave_hermansen
        Originally Posted by MoneyMang View Post

        Ok, well thanks again.

        I used Worldwide Brands. They have videos covering exactly what you said. Why in the world would they put these middleman in the directory when they teach to avoid them at all costs. But yeah, just got in contact with another distributor and well same crap.
        Like most dropship directories, Worldwide Brands is notorious for having very bad "wholesale" prices. A whole lot of middlemen dropshippers pretending to be distributors in there!
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        • Profile picture of the author Importexport
          Originally Posted by dave_hermansen View Post

          Like most dropship directories, Worldwide Brands is notorious for having very bad "wholesale" prices. A whole lot of middlemen dropshippers pretending to be distributors in there!
          Readers might like to have a look at this thread: Is WorldWide Brands worth the $299 membership fee? where Worldwide Brands was discussed in detail.

          There are 69 posts, but a small effort in reading could save you a lot of money.

          For the cost of a subscription to WWB people can buy sufficient inventory to start selling online and make a substantial profit.

          When I say substantial, I mean many times greater than the 10% to 25% margin referred to in the posts often seen on this forum. Here is a copy of an email from one of my book users: "Ok. From extremely skeptical to successful completion. Credit given where credit is due. I followed the book instructions you laid out. Took my time to double check everything and was able to successfully import an order from China. Not only that but it was also a "sample order" for less than 300.00. A 300% mark up has allowed to get initial investment back and I have 70% of my inventory left. Stop promoting your book. Your encouraging competition for me Many thanks." Email on file for FTC inspection if required.

          Walter Hay
          Provenchinasourcing
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          Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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          • Profile picture of the author MoneyMang
            Originally Posted by Importexport View Post

            Readers might like to have a look at this thread: Is WorldWide Brands worth the $299 membership fee? where Worldwide Brands was discussed in detail.

            There are 69 posts, but a small effort in reading could save you a lot of money.

            For the cost of a subscription to WWB people can buy sufficient inventory to start selling online and make a substantial profit.

            When I say substantial, I mean many times greater than the 10% to 25% margin referred to in the posts often seen on this forum. Here is a copy of an email from one of my book users: "Ok. From extremely skeptical to successful completion. Credit given where credit is due. I followed the book instructions you laid out. Took my time to double check everything and was able to successfully import an order from China. Not only that but it was also a "sample order" for less than 300.00. A 300% mark up has allowed to get initial investment back and I have 70% of my inventory left. Stop promoting your book. Your encouraging competition for me Many thanks." Email on file for FTC inspection if required.

            Walter Hay
            Provenchinasourcing
            Lol, Walter. I know you from the other forum #MJ haha. I have imported products from China, but sold as generics. They sell at a very slow pace, since so much competition. I planned on white labeling, but then realized that things sell really well when it is a brand. How does someone have the cash to create a whole branding campaign? I have tried numerous products from China, but had more misses than hits.
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            • Profile picture of the author Importexport
              Originally Posted by MoneyMang View Post

              Lol, Walter. I know you from the other forum #MJ haha. I have imported products from China, but sold as generics. They sell at a very slow pace, since so much competition. I planned on white labeling, but then realized that things sell really well when it is a brand. How does someone have the cash to create a whole branding campaign? I have tried numerous products from China, but had more misses than hits.
              If you want to sell brand names, I suggest you take the advice of Dave Hermansen. In other threads he has suggested contacting US manufacturers direct. It is worth searching for posts by Dave.

              Although I don't like dropshipping I know that he knows what he is talking about, and if you want to succeed in that field he could be your best chance.

              Walter Hay
              Provenchinasourcing
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              Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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        • Profile picture of the author MoneyMang
          Originally Posted by dave_hermansen View Post

          Like most dropship directories, Worldwide Brands is notorious for having very bad "wholesale" prices. A whole lot of middlemen dropshippers pretending to be distributors in there!
          Hmm...ok thanks a bunch. It's just that I watched their damn videos. They are teaching me to avoid middlemen so much, but put them on the directory. I just wouldn't think a directory would be so hypocritical.
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  • Profile picture of the author Significantincome
    Hello,

    I want to ask if there are people out there that use dropshippers outside their home country for 3rd party selling?

    I am based in Srilanka, but I want to resell US products from aliexpress. Its unable to alccess paypal from my country so I registered with 2checkout (srilankan account).

    I bet there are many people outside USA who do this legally without issues, any feedback is welcome.

    Thanks
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  • Profile picture of the author FoxMetricsATL
    Contacting the "brand" may also mean contacting the manufacturer. Getting a relationship with company who is actually making the product. A "distributor" is someone just like you.
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    • Profile picture of the author dave_hermansen
      Originally Posted by FoxMetricsATL View Post

      Contacting the "brand" may also mean contacting the manufacturer. Getting a relationship with company who is actually making the product. A "distributor" is someone just like you.
      Not necessarily. In many cases, true distributors are buying substantial quantities from the brands and getting amazing wholesale prices. While it is true that they mark those prices up and sell to you, in many cases that marked up price is still better than you would get ordering much smaller bulk from the brand.

      Besides that, one great distributor can carry several brands that you would otherwise not have access to. There are no hard and fast, always true rules here. The key is to let the brand tell you who their major distributors are. They know who the real bulk buyers are for their brand.
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      • Profile picture of the author Importexport
        Originally Posted by dave_hermansen View Post

        Not necessarily. In many cases, true distributors are buying substantial quantities from the brands and getting amazing wholesale prices. While it is true that they mark those prices up and sell to you, in many cases that marked up price is still better than you would get ordering much smaller bulk from the brand.

        Besides that, one great distributor can carry several brands that you would otherwise not have access to. There are no hard and fast, always true rules here. The key is to let the brand tell you who their major distributors are. They know who the real bulk buyers are for their brand.
        Exactly right. I've had the experience of finding that although able to buy direct from the manufacturer, the prices they have quoted have been higher than what was quoted by a distributor.

        That applies when buying locally, but would be a rarity when buying from manufacturers overseas.

        Walter Hay
        Provenchinasourcing.com
        Signature
        Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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        • Profile picture of the author dave_hermansen
          Originally Posted by Importexport View Post

          Exactly right. I've had the experience of finding that although able to buy direct from the manufacturer, the prices they have quoted have been higher than what was quoted by a distributor.

          That applies when buying locally, but would be a rarity when buying from manufacturers overseas.

          Walter Hay
          Provenchinasourcing.com
          Agreed. Buying overseas is an entirely different ball of wax. Since we are in the U.S., we deal with U.S. companies almost exclusively. If I was going to get things from China, it would be in bulk or small bulk and there is no way a U.S. distributor is going to compete with that (of course, in that case, we aren't talking about known brands, either).

          If you are going to go the China route, you would be very wise investing in Walter Hay's course, It's probably the best bargain out there for learning how to source products from Asian suppliers,
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  • Profile picture of the author NewParadigm
    if its easy to set up or already set up and the system is being marketed. profit is sucked out already. which it should be, because someone smart and early did the work figuring it out and setting up the drop ship system.
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